Thursday, December 27, 2012

Defendant was improperly served with The Notice of Default in the Mortgage and the summons and complaint against the Alzheimer's patient defendant was
allegedly served on the administrator of the wrong nursing
home. Many discrepancies were found with the descriptions of each person served. The complaint is dismissed for improper service of process, and the action is dismissed.

FULL DECISION BELOW

Decided on December 24, 2012

Supreme Court, Queens County

Financial Freedom Acquisition LLC

against

Evelyn L. Jackson a/k/a EVELYN L. JACKSON BROOKS, et al.

8473/2011

For the Plaintiff: Stein, Wiener & Roth, LLP, by Gerald Roth
and Robert Sambursky, Esqs., One Old Country Road, suite 113, Carle Place, New
York 11514

The Court's prior order dated October 26,
2012, and entered on November 19, 2012.......3

CHARLES J. MARKEY,
J.

In a sua sponte decision
by the undersigned, dated October 26, 2012, and entered on November 19, 2012,
the Court observed that the plaintiff financial institution submitted a proposed
order for this Court's consideration to name a referee to compute sums allegedly
due to the plaintiff in this mortgage foreclosure case.

In that decision, and
based on a review of the plaintiff financial institution's papers, the
undersigned already had grave concerns on the legitimacy of the service of
process and the mental condition of the homeowner who was confined to a nursing
home. In that order, this Court decided to appoint Christina Cline, Esq., a
distinguished lawyer with an expertise in elderly law to act as the guardian ad
litem for defendant Evelyn L. Jackson a/k/a Evelyn L. Jackson brooks. The Court
asked Ms. Cline to make an extensive investigation and submit proposed findings,
recommendations, and conclusions. Finally, the Court set Ms. Cline's fee at
$275.00 fee per hour, plus expenses, and such fees and expenses shall be paid to
her by the plaintiff. The hourly fee is modest when Ms. Cline's professional
credentials and significant experience are taken into consideration. [*2]

Ms. Cline, taking her
fiduciary appointment with admirable seriousness of purpose, set forth on her
appointed task immediately, overcoming considerable time constraints and
permitted the appointment to override her other pressing matters. The Court is
impressed with the extensive report submitted by Ms. Cline, her investigation
and recommendations. The Court adopts Ms. Cline's report in all respects,
without exception, as though it were made by the undersigned. The Court ratifies
and adopts all of the findings and conclusions contained therein. In brief, the
results of Ms. Cline's investigation confirmed all of the undersigned's worst
fears and suspicions when the Court issued its order in October.

The case law is already
expansive on the rampant abuses in the mortgage foreclosure field. Documentary
filmmaker Joel Sucher, in a series of articles for American Banker,
Huffington Post, and in several other blogs available on the internet, has
been an eloquent champion against the bullying, corrosive, and abusive tactics
used by "servicers" of mortgages in debt. In one article dated March 26, 2012,
for American Banker, entitled "Behind Every Distressed Asset' Is a
Distressed Human Being," Joel Sucher, whose forthcoming film is entitled "
Foreclosure Diaries," concerning the current financial crisis, states:I'm
intrigued by the Orwellian phraseology that megabanking executives and the
mortgage industry have coined to describe their work. They trade, for instance,
in "distressed assets."

What's a distressed asset?
From what I understand, an asset, like a subprime mortgage, is distressed
because it fails to churn out the revenue stream it was originally supposed to
produce. But post-crash, with a nod to obfuscation, "distressed assets" have
become "legacy assets."

It doesn't take
[contemporary Italian essayist and philosopher] Umberto Eco to figure out the
real meaning of these dehumanizing terms: for the millions of people whose
assets - - their homes - - are underwater, it's their lives that have become
truly distressed.

The Court will quote
extensively from the report of Christina Cline, Esq., because the abuses that
occurred in the case at bar would have overwhelmed a powerless individual such
as defendant Evelyn Jackson, had the undersigned's earlier apprehensions not
been aroused leading to the appointment of Ms. Cline. Ms. Cline's report to the
Court, in pertinent part, states:

INTEREST OF MY
WARD

2. My ward owns one half
share of the property which is the subject of this foreclosure action. There is
nothing in the court file that indicates that my ward is the sole owner. A view
of the ACRIS records does not reveal how the property is held.

BACKGROUND

3. This action is one of
FORECLOSURE upon a reverse mortgage. The defendant, [*3]EVELYN L. JACKSON, a/k/a EVELYN L. JACKSON BROOKS,
and Harding Brooks allegedly signed a mortgage agreement with FINANCIAL FREEDOM
SENIOR FUNDING CORPORATION, a subsidiary of Lehman Brothers Bank, FSB on May 21,
2004.

4.The mortgage allowed for
an indebtedness of $475,000.00 with interest. At the closing the following
payments were made: $215,745.00, Initial Payment of the loan which consisted of:
$16,668.00, closing costs; $142.150.86, payment of liens; $53,285.71, loan
advance; $3,640.43. At the time the action was commenced there was a balance due
to Plaintiff in the amount of $217,225.40.

7.On October 13, 2010 the
assignee of the Mortgage, Financial Freedom Acquisition, L. L.C. sent a letter
entitled "Home Equity Conversion Mortgage Repayment Notice" addressed to Evelyn
L. Jackson-Brooks at 109-14 177th St. Jamaica, New York 11433. In part the
letter states "Upon the occurrence of a maturity event, including the borrower's
decision to permanently leave and no longer occupy the subject property as a
primary residence, the loan becomes due and payable." It continues in the second
paragraph, with information and assistance to which the borrower is entitled.
Defendant, EVELYN L. JACKSON defaulted on the mortgage.

8. A Lis Pendens was filed
in April 2011.

9. Plaintiff filed a
summons and complaint in Queens Supreme Court.

10.Defendant did not
appear in the action nor did she submit an answer in the action.

11. Plaintiff submitted a
motion for an Order of Reference upon which the Court issued an Order appointing
your affiant in connection with the motion.

INVESTIGATION

12.My ward, EVELYN L.
JACKSON, the defendant in this action, currently resides at the Hollis Manor
Nursing Home located at 191-06 Hillside Ave. Hollis, NY 11432, having been
placed in the facility on May12, 2010, by her son, Will Jackson. Her admitting
diagnosis in 2010 was Alzheimer's disease, macular degeneration, seizure
disorder, and hypertension. [*4]

13. Prior to being placed
in Hollis Park Nursing Home by her son, Ms. Jackson resided at her home located
at 109-14 177th Street, Jamaica, New York 11433 the premises of this action.

JURISDICTION

14. The Affidavit of
Service submitted by plaintiff in support of personal jurisdiction over
defendant, Evelyn L. Jackson, a/k/a Evelyn L. Jackson Brooks states the
following:

a. that on 4/12/11 at the
Hillside Manor Nursing Home located at 191-06 Hillside Ave, Hollis, NY 11432
Andrew Ceponis served the summons and complaint bearing Index No. 8473-11 &
filing date 04/06/11upon individual Evelyn L. Jackson a/k/a Evelyn L. Jackson
Brooks defendant therein by delivering thereat a true copy of each to said
defendant personally; deponent knew said person so served to be the person
described as said defendant therein named. She identified herself as such.

b. The description of
Evelyn L. Jackson is given as a female, black, grey hair of 85 years of age only
5ft. 3in. weighing 105lbs.

15. On December 4, 2012 I
visited the defendant Evelyn L. Jackson at the Hollis Park Nursing Home -
- NOT the Hillside Manor Nursing Home, as indicated in the Affidavit of
Service - - where Ms. Jackson has been since May 12, 2010. I found Ms. Jackson a
pleasant elderly woman. I inquired of her regarding the service of the summons
and complaint, the notice of default, the judgment, and of the underlying
mortgage on her house she has absolutely no recollection of anything about this
action. I inquired of her as to her family members and the information she
provided me is completely inaccurate and different from that supplied to me by
the nursing home staff. I inquired of SHARON SELBERG, who functions as both
receptionist and director of social activities, whether she was present when
EVELYN L. JACKSON was allegedly served with the Summons and Complaint, and she
informed me that she had no recollection of any such event.

16. I inquired of Dr. Riki
Koenigsberg, the resident Psychologist who advised me that EVELYN L. JACKSON
suffers from Alzheimer's disease, dementia, and macular degeneration. When I
inquired whether Ms. Jackson would be able to understand the documents even if
one assumed that she was in fact served with any of them. I was informed by Dr.
Koenigsberg that Ms. Jackson's eyesight is so poor that she can not even see her
food never mind read legal documents. I asked if her eyesight had been poor in
July 2011 and was informed that it had been just as poor at that time and in
fact that it had been poor in May12, 2010 upon her admission to Hollis Park
Nursing Home.

17. Dr. Koenigsberg also
informed me that even if she had been able to see the papers she would have had
no concept of the importance of the documents as her Alzheimer's disease and
dementia had progressed to the point that she could neither understand not
conceptualize the [*5]importance of a summons,
complaint or a notice of default.

18. The Affidavit of
Service submitted by plaintiff in support of personal jurisdiction over
defendant, Evelyn L. Jackson, a/k/a Evelyn L. Jackson Brooks states the
following:

a. that on 4/12/11 at the
Hillside Manor Nursing Home located at 191-06 Hillside Ave, Hollis, NY 11432
Andrew Ceponis served the summons and complaint bearing Index # 8473-11 &
filing date 04/06/11-upon individual Evelyn L. Jackson a/k/a Evelyn L. Jackson
Brooks B/S/U Nathan Heilweil as Administrator of the Hillside Manor Nursing Home
3 story brick defendant therein named by delivering thereat a true copy of each
to said defendant personally; deponent knew said person so served to be the
person described as said defendant therein. (S)he identified (her) himself as
such.

b. The description of
NATHAN HEILWEIL is given as a male, white, brown hair of 54 years of age,
height-6' 1" weighing 210lbs.

19. On November 12, 2012 I
spoke to NATHAN HEILWEIL who informed me that he had no recollection of ever
being served in this matter and referred me to the Edith Gonzalez in the
Comptroller's office to review the records contained in Ms. Jackson's file.
"Edith Gonzalez" indicated that Ms. Jackson's file contained a large manilla
envelope with a date stamp of August 22, 2012. The envelope contained a notice
of default dated 7/27/12. Ms. Gonzalez indicated that the envelope had been
delivered to the Nursing Home and forwarded to her office and that it had been
retained by her in the Controller's office. There is nothing in the nursing home
file that indicates that Ms. Jackson ever received the Summons and Complaint or
the Notice of Default, or a copy of any Judgment entered against her.

20. While there, I
inquired of Mr. Heilweil and he informed me that he is 62 years of age 5'9" tall
weighing 190-200 lbs and has grey hair.

NOTICE OF DEFAULT IN THE
ACTION

21. Upon visiting the
Hollis Park Nursing Home, I was informed that they had an envelope in Ms.
Jackson's file, but that Ms Jackson never received it.

APPLICABLE
LAW: APPOINTMENT OF AGUARDIAN AD LITEM

22. Mrs. Jackson is an
incapacitated person. Even though she had not been judicially declared
incapacitated, in an Article 81 proceeding the Court still has certain
obligations with respect to the proceeding in which a party is incapacitated.

23. CPLR 1201 states that
"a person shall appear by his guardian ad litem . . . if he is an [*6]adult incapable of adequately prosecuting or
defending his rights." (CPLR 1201).

24. The appointment by a
guardian ad litem for an adult incapable ofadequately prosecuting or defending
his rights" is made by the courtin accordance with CPLR 1202 . . . .

* * ** * * ** *

25. CPLR 1203 states that,
". . . No default judgment may be enteredagainst an adult incapable of
adequately protecting his rights forwhom a guardian ad litem has been
appointed unless twenty dayshave expired since the appointment." (Emphasis
added.)

26. While the statutes are
vague if not silent with regard to aplaintiff's obligation when dealing with an
incapacitated defendant,case law is replete with the court's interpretation that
Article 12places an obligation upon a party to advise the court of the
possibilitythat another party may suffer an incapacity or that he or she is
aperson "incapable of adequately prosecuting or defending hisrights."(CPLR 1201)

* * ** * * ** *

The papers submitted in
support of the application present a strongevidentiary showing that at the time
the action was commenced and atthe time the default judgment was entered, the
decedent Defendant,Evelyn L. Jackson, although not judicially declared an
incompetent,was "an adult incapable of adequately prosecuting or defending
herrights" (CPLR 1201). As such, she should have been represented inthe action
by a guardian ad litem. In fact "it is questionable whether any appearance by
the defendant . . . either pro se or by an attorney, without the appointment of
a guardian ad litem, would have been authorized." (Rand v Lockwood, 65
Misc 2d 182 [Sup Ct Nassau County 1970]). A person specified in CPLR 1201 may
only appear by a guardian ad litem.

* * ** * * ** *

CONCLUSIONS

31. From the examination
and analysis of the entire file herein, the "Home Equity Conversion Mortgage
Repayment Notice," the Summons and Complaint, the affidavit of services, the
Notice of Default, and the affidavit of service: the files held by Hollis
Nursing Home; the conversations with Nathaniel Heilwell, "EDITH GONZALEZ", the
comptroller and other members of the nursing home staff, and my own
investigation, my conclusions in this matter are as follows:

The Notice of Default in
the Mortgage was improperly served upon defendant, Evelyn L. [*7]Jackson at 109-14 177th Street, Jamaica, New York
11433. In light of the fact that defendant's absence from the premises forms the
basis of the default sending the Mortgage Repayment Notice denied the defendant
of her right to notice and the opportunity to timely repay the balance amount
and HUD services prior to the Foreclosure proceeding. As plaintiff had actual
knowledge (plaintiff's action is based upon the fact that defendant was not
living at the premises) of this condition precedent to the commencement of the
action, the action must be dismissed.

32. As to the affidavits
of service I find the following irregularities:

A.Service upon Evelyn L.
Jackson

1. disparities in location
of service— affidavit of service states that defendant, Jackson was served at
Hillside Manor Nursing Home— while she is a resident of Hollis Park Manor
Nursing Home. The Name is clearly displayed in the front of the building and it
would seem difficult to mistake the name if the process server had been there.

2. disparities in
description of individual served— affidavit of service describes defendant
Jackson as a black female with grey hair being 85 years of age, 5'1" and 105
lbs. Ms. Jackson is 92 years of age.

1. disparities in person
served—Mr Heilweil is the Administrator of the Hollis Park Manor Nursing Home.

2. disparities in
description of person served— The Affidavit of Service contains a description of
NATHAN HEILWEIL as a male, white, brown hair of 54 years of age, height-6' 1"
weighing 210lbs. In fact, Mr. Heilweil is 62 years of age 5'9" tall weighing
190-200 lbs and has grey hair.

33. While counsel alleges
in paragraph 13 of the affirmation in support of the instant motion that a
notice pursuant to RPAPL 1303 was served with the Summons and Complaint no
mention of that notice is indicated in the affidavit of service of the summons
and complaint, nor is there any separate affidavit in the court file or in the
Motion for an Order of Reference.

34. The Notice of the
Default in the Action was served again at Hillside Manor Nursing Home.

35. The Motion for an
Order of Reference was served again at Hillside Manor Nursing Home.

36. There is no indication
of service of the notice of 3215(g)(3)(I) 20 day notice before [*8]the entry of judgment.

37. Paragraph 24 of the
affirmation of counsel states that all of the defendants herein are of full age
and none of said defendants is an incompetent or absentee. Clearly defendant is
incapacitated.

38. The estate of Harding
Brooks was not served and there is nothing to indicate that there are no heirs
at law of Harding Brooks who would be entitled to notice especially as there is
nothing to indicate that the property was held by Harding Brooks and Evelyn L
Jackson a/k/a Evelyn L Jackson-Brooks as tenants by the entirety giving her
rights to the entire property upon Harding Brooks' death.

39. Thus, I conclude:

(1) the condition
precedent to the commencement of the action has not been properly completed,

(2) that jurisdiction of
this Court over EVELYN L. JACKSON has not been properly obtained in that she was
not properly served and

(3) that there is no
indication that the notice pursuant to RPAPL 1303 was served upon defendant
Jackson,

(4) that the Notice that
the action should not have proceeded without the appointment of a Guardian ad
Litem for Ms Jackson in accordance with CPLR 1201. The action must be dismissed
or in the alternative that defendant should be returned to her position upon the
service of the "Home Equity Conversion Mortgage Repayment Notice" as the court
did in Oneida Nat. Bank & Tr. Co. v Unczur, 37 AD2d 480, 483 [4th
Dept. 1971].

In light of the
irregularities and the failure of plaintiff to comply with the applicable law
and statutes, it should be responsible for any and all additional costs,
interests, incurred as a result of the delay in the proceeding.

The Court adopts each and
every one of the findings, recommendations, and conclusions quoted above by Ms.
Cline. The Court finds that defendant Jackson had no mental competency so as to
understand what papers she was receiving, assuming arguendo that papers had
indeed been served on her. Second, aside from Ms. Jackson's dementia and lack of
mental competency, the Court finds that the nursing home's administrator was not
properly served as contended by the plaintiff.

The Court, finally, thanks
Ms. Cline for the great amount of time, effort, and energy spent [*9]in preparing a comprehensive report.

The Court, entirely
agreeing with Ms. Cline's report, dismisses the complaint for the improper
service of process, as set forth above. The Clerk is thus directed to dismiss
the action.

Concerning the appropriate
fee, Ms. Cline's accompanying affirmation of services indicates that she has
worked 18.2 hours on the report. The Court previously awarded her a fee of
$275.00 per hour. Accordingly, the Court awards Ms. Cline the sum of $5,005.00
for her fees. The Court further awards Ms. Cline the sum of $575.00 for
expenses.

In sum, the plaintiff
shall pay Ms. Cline the sum of $5,580.00 within 20 days of the service upon it
by Ms. Cline of a copy of this order bearing the County Clerk's dated stamp of
entry. If such sum is not paid by the plaintiff timely, the Court shall convene
a hearing and entertain an application by Ms. Cline for higher fees based upon a
re-evaluation of whether Ms. Cline's services should have been compensated at
the rate of $550.00 per hour.

The complaint is dismissed
for improper service of process, and the action is dismissed.

The foregoing constitutes
the decision, opinion, order, and Judgment of the Court.

Monday, December 17, 2012

The Independent Foreclosure Review is the government's main effort to
compensate homeowners for harm they suffered at the hands of banks —
and, as its name indicates, it's supposed to be independent.

But until recently, that was hardly the case with Bank of America.
Supposedly independent, third-party reviewers would sit at a computer,
analyzing each homeowner's case by going through hundreds of questions,
such as whether the bank had properly reviewed a homeowner for a
modification or had charged bogus fees. But the reviewers weren't
starting from a blank slate. Bank of America employees had already
supplied the answers, which the reviewers would have to override if they
did not agree.

Due to the recent events precipitated by hurricane Sandy, the Debtors have requested that the Court extend the General Bar Date for a limited period; the General Bar Date is extended from Friday, November 9, 2012 at 5:00 p.m. (Prevailing Eastern Time) to and including Friday, November 16, 2012 at 5:00p.m. (Prevailing Eastern Time) (the “Extended General Bar Date”).

Wednesday, October 24, 2012

Judge Martin Glenn of the U.S. Bankruptcy Court in Manhattan turned down a bid for the appointment of an official committee to represent borrowers in the Chapter 11 proceeding of the nation's fifth-largest home-loan servicer on the grounds the company's troubles, and those of the industry, have spawned sufficient safeguards.

Judge Glenn, however, cited a promise by the official creditors committee to refer borrower issues to special counsel. That is enough to guard against the "theoretical risk" that ResCap's official creditors committee, which has one borrower member, won't have the interests of borrowers at heart, the judge said.

Mr. Brown said he was surprised by the ruling but was encouraged by Judge Glenn's recognition that borrowers allegedly injured by ResCap's practices have a special stake in the case, which should be addressed by the special counsel the creditors committee has offered to hire.

"Now if they appoint a firm that has a nationwide practice foreclosing on people or that has a huge banking practice, that's not someone borrowers will trust and probably not someone that will understand the unique problems of someone in foreclosure," Mr. Brown said.

Monday, October 22, 2012

Our client A.W. was sued by American Express for credit card debt in 2009. After aggressively litigating for 3 years, American Express finally gave up and discontinued the action. Below is the NOTICE OF DISCONTINUANCE.

Tuesday, October 16, 2012

The Law Office of Robert E. Brown, PC has successfully negotiated a loan modification with US Bank National for our client Luis Padilla.

Padilla's previous principle and interest payment was $1312.70 with a 6.0% interest rate.

On September 25, 2012 Hogan & Lovells (representing US Bank National) presented a trial modification plan to our client, Luis Padilla. After careful consideration, our client accepted the loan modification offer and began making his first payment immediately. Our client's current principle and interest trial payment is $972.56. With a rate of 2.0%.

Monday, August 27, 2012

Homeowners with mortgages serviced by Residential Capital LLC want to form an official committee in the company's
bankruptcy case, which would give them a louder voice in the company's complicated Chapter 11 proceedings. In a Friday filing with U.S. Bankruptcy Court in Manhattan, a lawyer for the group of homeowners said they're
concerned that state and federal settlements this year with mortgage servicers including ResCap's government-owned
parent Ally Financial might not be enforced properly now that ResCap is in bankruptcy. A ResCap spokeswoman declined to
comment. The settlement, over borrower claims of improper foreclosure practices, offers billions of dollars in relief to many
homeowners who either owe more than their homes are worth or were forced to sell their homes and move. While the
homeowners do have one representative on ResCap's official committee of unsecured creditors--a plaintiff in a
Pennsylvania class-action lawsuit brought by the same lawyer asking for a committee--the group said it needs more say to
protect its interests. "One borrower claimant seated on the Committee will simply be overruled if any objection is made" by other "dominant"
members of the committee, the lawyer said. Further, if the class-action suit isn't viable, "then the one and only
borrower representative will be found to have no standing to be on the creditors' committee," the lawyer said in the
filing. ResCap said at the time of its bankruptcy filing that 65,000 of its customers are in foreclosure proceedings, and
51,000 have declared bankruptcy. An official committee gets more stature than standalone creditors in a bankruptcy case, most notably because it
typically gets its legal and professional fees paid for by the estate. The lawyer, Robert E. Brown of Robert E. Brown PC, points out in his filing that a borrowers' committee was appointed
in the bankruptcy case of American Home Mortgage Holdings Inc. (AHMIQ). ResCap's restructuring hinges on the sales of its various mortgage assets to Berkshire Hathaway Inc. (BRKA, BRKB) and
Nationstar Mortgage Holdings Inc. (NSM), which have been named the stalking-horse bidders for ResCap's legacy loan
portfolio and mortgage-servicing portfolio, respectively. The sales, which are subject to higher bids, could generate
more than $4 billion for ResCap's estate. ResCap filed for Chapter 11 protection May 14 as bond-related payments loomed and litigation over soured mortgage-
backed securities mounted. The move is intended to help Ally, which isn't part of the bankruptcy, sever itself from an
estimated $400 million to $1.25 billion in liabilities related to ResCap's troubles.
Full Article: Nasdaq.com

Homeowners with mortgages serviced by
Residential Capital LLC want to form an official committee in the
company's bankruptcy case, which would give them a louder voice in the
company's complicated Chapter 11 proceedings. ...For the full story click here

If you would like to
support the Homeowners' motion for an official committee, you can do so by
writing a letter to the Judge and the US Trustee. We have provided a sample
letter, which contains their addresses. Feel free to make any changes you like,
or write your own letter. If you are a homeowner that has a claim against
ResCap, GMAC or any related entity and would like to join the motion, please
contact my office at 212-766-9779 or email me at rbrown@robertbrownlaw.com
.

August ___, 2012

The
Honorable Martin Glenn

United States Bankruptcy Court
Southern District of New York
One Bowling Green, Court Room 501New York, NY10004

Ms. Tracy Hope Davis, Esq.

Brian Masumoto, Esq.

Linda Riffkin, Esq.

Office
of the United States
Trustee33 Whitehall Street

21st Floor

New York,
NY10004

Re: Case No. 12-12020 (MG)

Dear Judge Peck and Ms. Davis:

We write to
express our support for the formation of a separate committee to represent
homeowner interest and to ensure that homeowners have an opportunity to be represented
and to seek appropriate relief against Residential Capital LLC and related GMAC
subsidiaries which participated in origination, servicing and securitization of
mortgage loans.

GMAC was one of the top five mortgage
lenders, loan servicers, and prolific securitizer of mortgage loans and
therefore this bankruptcy affects millions of homeowners. Ally's legacy
mortgage assets - that is, GMAC mortgages and securities predating 2009 -
totaled $10.9 billion on Dec. 31, according to the company's annual report. ResCap wrote off $22 billion in
mortgages in 2009, 2010, and 2011 much of it subprime mortgages.[1] Ally is the primary servicer
on 2.3 million mortgages with collective unpaid principals totaling about $356
billion, according it a recent SEC filing.

The federal government and 49
states reached a settlement with a group of banks on their defective foreclosure
procedures and ResCap- GMAC participated in that settlement and paid a $212
million fine. Homeowners spread out
all over the United States
have unique issues and are without the resources to advocate for their own
interest in a New York
bankruptcy court. Absent appointment of
a committee, the homeowners will not have a representative voice or any
meaningful way to participate in the case.
The size of this bankruptcy with over 51 entities involved and inherent
complexity weigh in favor of the appointment of an additional committee to
represent this unique group of claimants.

The seated unsecured creditors
committee consists of Trustees, Deutsche Bank. US Bank, and Bank of New York
Mellon, the very parties who are currently seeking to foreclose on homeowners in
state courts. The remaining members are insurers, MBIA and AIG, who are
assigned the right to collect deficiency judgments from homeowners after
foreclosure. This dynamic creates a conflict of interest that is only rectified
by the appointment of a separate committee of homeowners only.

Ally Financial, the former GMAC still owes
taxpayers about $12 billion $17.2 billion in loans it received as part of the
bailouts and the government still owns 74% of Ally, who has repaid only $5.5
billion of $17.2 billion it got in the bailout.
It has been widely reported
that Ally put its home mortgage subsidiary into bankruptcy court to end the
drag of its toxic mortgage assets on Ally's profitable businesses. Ally CEO Michael Carpenter said in a
statement: "The action by ResCap will enable Ally to achieve a permanent
solution to its legacy mortgage risks and put these issues behind us." [2]

The taxpayers and victims of
fraudulent practices as detailed in the settlement agreement and consent orders
deserve a seat at the table and representation in this bankruptcy as Ally
attempts to leave behind and dump its “toxic mortgage assets” – translation
their homes.

Our
state has been hit hard with foreclosures, and we believe that the formation of
a homeowner committee will ensure that the promises made by Ally and GMAC to
work with homeowners in distress will be followed through during the bankruptcy
proceedings. The committee will also
help to avoid confusion and give homeowners a point of contact to assist them
in understanding the complex and byzantine process of Chapter 11 bankruptcy and
how it affects their rights.

Homeowners with mortgages serviced by Residential Capital LLC want to form an official committee in the company's bankruptcy case, which would give them a louder voice in the company's complicated Chapter 11 proceedings.

In a Friday filing with U.S. Bankruptcy Court in Manhattan, a lawyer for the group of homeowners said they're concerned that state and federal settlements this year with mortgage servicers including ResCap's government-owned parent Ally Financial might not be enforced properly now that ResCap is in bankruptcy. A ResCap spokeswoman declined to comment.

The settlement, over borrower claims of improper foreclosure practices, offers billions of dollars in relief to many homeowners who either owe more than their homes are worth or were forced to sell their homes and move. While the homeowners do have one representative on ResCap's official committee of unsecured creditors--a plaintiff in a Pennsylvania class-action lawsuit brought by the same lawyer asking for a committee--the group said it needs more say to protect its interests.

"One borrower claimant seated on the Committee will simply be overruled if any objection is made" by other "dominant" members of the committee, the lawyer said. Further, if the class-action suit isn't viable, "then the one and only borrower representative will be found to have no standing to be on the creditors' committee," the lawyer said in the filing.

ResCap said at the time of its bankruptcy filing that 65,000 of its customers are in foreclosure proceedings, and 51,000 have declared bankruptcy. An official committee gets more stature than standalone creditors in a bankruptcy case, most notably because it typically gets its legal and professional fees paid for by the estate.

The lawyer, Robert E. Brown of Robert E. Brown PC, points out in his filing that a borrowers' committee was appointed in the bankruptcy case of American Home Mortgage Holdings Inc. (AHMIQ).

ResCap's restructuring hinges on the sales of its various mortgage assets to Berkshire Hathaway Inc. (BRKA, BRKB) and Nationstar Mortgage Holdings Inc. (NSM), which have been named the stalking-horse bidders for ResCap's legacy loan portfolio and mortgage-servicing portfolio, respectively. The sales, which are subject to higher bids, could generate more than $4 billion for ResCap's estate.

ResCap filed for Chapter 11 protection May 14 as bond-related payments loomed and litigation over soured mortgage-backed securities mounted. The move is intended to help Ally, which isn't part of the bankruptcy, sever itself from an estimated $400 million to $1.25 billion in liabilities related to ResCap's troubles.

Wednesday, August 15, 2012

In a July 24, 2012 decision
by Justice Demarest, the court denied summary judgment seeking to
foreclose on a mortgage and note. The mortgage and note were held by
Washington Mutual Bank (“WaMu”), until the Federal Deposit Insurance
Corporation (“FDIC”) appointed a receiver for WaMu and transferred all
of its loans to Chase Bank. When defendants stopped making payments,
Chase notified them they were in default. Chase then transferred the
loan to a new entity, which later transferred the loan to Plaintiff.

Thursday, June 21, 2012

All homeowners who believe they have claims against one of the entities
listed on EXHIBIT “A” qualify to participate in the motion to appoint a
committee. There is no cost
to any participant and if the committee motion is granted the debtor in this
case, Residential Capital and subsidiaries will pay for the committee expenses
pursuant to 11 U.S.C. § 503(b)(4).

Claimants
that have lawsuits pending have standing to participate in this motion. Further
homeowners who
believe that they have claims, including illegal foreclosure, but do not have a
lawsuit pending may still qualify. For more details click here.

"Just saved a soldier's house from
foreclosure in a pro bono case I am handling through the NY Guard. She got a
loan mod of 2% for 5 years and then 4% for the life of the loan - down from her
original rate of 9.75%. Her payments dropped almost $600 a month and the bank
gave her a principal reduction of over $10,000."

Robert Brown, a consumer attorney based in New York will bring the motion for an Official Borrower Committee in the Residential Capital, LLC bankruptcy case. He has experience in lender liability litigation and bankruptcy practice.

All homeowners who believe they have claims against one of the entities listed on EXHIBIT “A” qualify to participate in the motion to appoint a Borrower Committee. There is no cost to any participant (homeowner) and if the committee motion is granted the debtor in this case, Residential Capital and subsidiaries will pay for the committee expenses pursuant to 11 U.S.C. § 503(b)(4).

Claimants that have lawsuits pending have standing to participate in this motion. Furthermore, homeowners who believe that they have claims, including illegal foreclosure, but do not have a lawsuit pending may still qualify.

Time is of the essence as events are already unfolding which may affect borrower rights. Those events include an $8.7 billion settlement couched as a claim, wherein ResCap and Ally will agree not to challenge repurchase claims with large institutional creditors.Another important issue is the bankruptcy may release Residential Capital, LLC and Ally Financial Inc. from the nationwide loan-servicing and foreclosure settlement.

Bankruptcy law allows for formation of Official Committees in a chapter 11 bankruptcy cases to represent various classes of claimants.In lender bankruptcies it is typical that Indenture Trustees, insurers and large bank claims dominate the committee for the unsecured creditors.The borrowers are included under this committee. Understandably this creates conflicts of interest if the borrower claim is directly against not only the bankrupt entity, but may also be against a Trustee, insurer or bank seated on the committee.

In the American Home Mortgage bankruptcy case, the judge determined that inherent conflicts of interest existed and appointed a separate committee to represent only borrowers. This was the only lender bankruptcy case to date where this occurred. Paula Rush was the driving force behind that committee, served as Chairperson of that Committee, and she will be assisting Robert Brown in the formation of a committee in this case.You may reach Paula to answer any questions you may have at 443-676-3509.

To begin, you only agree to have your client’s name included on the motion for appointment

of the committee and prepare a paragraph of background relating to the violations asserted resulting in a claim to be included in the motion.A hearing will be scheduled for the motion and you may attend the hearing, but you do not have to attend.The attorney bringing the motion will argue it before the court on behalf of all participants on the motion.

After the committee motion is granted, the U.S. Trustee will send out questionnaires to ask if you would like to serve on the committee.You do not have to serve on the committee as it is voluntary.Anyone can serve on the committee regardless of what state you are in. Meetings are held via conference calls to discuss what actions the committee will take as the bankruptcy progresses.

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